Keeping Your New Year’s Resolutions with Bad Credit

Experts share their tips and advice daily on BadCredit.org, helping subprime consumers navigate the world of personal finance.

Having bad credit is a common problem that can result in a major headache.

You may find yourself getting denied for credit cards, receiving high rates on loans or insurance, paying higher deposits for cell phones and possibly even being denied a job or apartment.

If your New Year’s resolution is to fix your credit, follow these four steps and watch your score rise.

1. Understand your situation.

First, it’s key to understand why you have bad credit in the first place. Do you always pay your bills late? Do you regularly max out your credit cards? Have you defaulted on any loans or payments?

Take an honest look at your situation and try to figure out why your credit is suffering. Identify what behaviors got you here and determine if it’s a result of behavior that can be adjusted.

2. Make a plan.

Now that you’ve figured out how you ended up with bad credit and what got you there, it’s time to make a plan for ending these behaviors and improving your credit.

If your problem is you never pay your bills on time because you can’t afford it, you need to make a new debt repayment plan – either on your own or with the help of a debt counseling service – to ensure you make your payments by the due dates.

If it’s out of forgetfulness, make a schedule and set reminders in your phone or computer’s calendar so you never miss a bill.

If you are always overspending or maxing out your credit cards, you need to sit down and make a budget so you can live within your means.

First, make a list of all your required monthly expenses, including any debt payments. Whatever is left is the only disposable income you have to work with. Stick to this budget and your credit will begin to improve.

“If you tell other people about your goals,

you are more likely to stay accountable.”

3. Use tools.

You’re not totally on your own when it comes to reaching your New Year’s resolution. Free tools abound for those looking to get better control of their finances.

One of the most popular ones is Mint, a website that also has a free smartphone app.

Give it permission to access all of your bank accounts, credit cards and loans, and it gives you a holistic picture of your financial health. Use it to create a budget and monitor your spending in various categories.

It also lets you create goals, which you can easily monitor 24/7. For instance, if you only have $300 dedicated toward food each month, you can log in and see how far along you are toward that amount at any time.

4. Stay motivated.

After a while, being good and sticking to your routine can get tiresome and boring. After several months, you may find yourself losing motivation and more tempted to make decisions that work against your goals.

It’s important to have motivators in place as a back-up. Here are two ideas for staying motivated:

Be public with your goals.

If you tell other people about your goals, you are more likely to stay accountable and get support.

Having a tough day? Post on social media that you’re trying to stick to your New Year’s resolution and need support. Or simply announce your goal to your coworkers, friends or family.

You may be surprised how much support and encouragement you will receive from others.

You can also enlist the help of others. For example, let your friends know it’s OK to say something if they notice you’re back to your old ways. You’ll be less likely to slip when you know others are aware of your activities and goals.

Post reminders.

Type up your goals, whether it’s sticking to a certain budget, paying all your bills on time or avoiding specific spending behaviors, and stick it up on your fridge.

Consider posting something regularly that shows your progress. If your goal is debt repayment, post something each month that shows your decreasing balance or how much progress you have made to help you stay motivated and enthusiastic.

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